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India's retail inflation eases for second straight month in February

Reuters  |  NEW DELHI 

By Kumar

NEW DELHI (Reuters) - India's eased for the second straight month in February but remained above the 4 percent medium-term target of the Reserve of (RBI), strengthening views it will hold rates steady at its April meeting rather than raise them.

The central bank, which has kept rates steady since a 25-basis-point cut in August, is widely expected to maintain rates at their current level next month.

India's measure of consumer price inflation on an annual basis, the index, eased to 4.44 percent in February, data released by the showed on Monday.

January saw annual consumer inflation of 5.1 percent, off the December figure of 5.2 percent, which was the highest rate in 17 months.

Analysts polled by had predicted February's rate would ease to 4.8 percent from 5.1 percent in January. Forecasts ranged from 4.4 percent to 5.6 percent.

rose 3.26 percent in February, compared with 4.70 percent in January, as prices of pulses fell more than 17 percent from a year earlier.

Fuel and light inflation stood at 6.8 percent, compared with 7.58 percent in January, while housing inflation stood at 8.28 percent, from 8.33 percent the previous month.

Narendra Modi, who faces a next year, is trying to push up economic growth while keeping inflation under control.

The central expects to pick up to 5.1 percent to 5.6 percent in April-September before easing, assuming normal rainfall.

Some economists feel that with annual economic growth climbing to 7.2 percent in the October-December quarter, the RBI could resort to pre-emptive monetary tightening to cool prices.

"We expect the RBI to allude to possible policy tightening at the next meeting in early April, as the concerns on growth slide," Prakash Sakpal, in Singapore, said in a note published before Monday's data release.

Analysts said could accelerate to 6 percent by June and may remain at 5 percent to 6 percent in the financial year that begins on April 1, leading to pre-emptive monetary tightening.

Several analysts now expect one 25-basis-point hike in July-September.

Separately, India's annual industrial output grew 7.5 percent in January, data released on Monday showed, compared with 6.7 percent forecast in a poll.

The world's seventh largest economy is expected to grow 6.6 percent in the current fiscal year ending in March. The expects growth will pick up to 7.4 percent in 2018, and 7.8 percent in 2019.

(Additional reporting by in MUMBAI; Editing by and Clarence Fernandez)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, March 12 2018. 18:28 IST